Chapter outline
    1.  Development and Economic Growth
    2.  Country Growth Experiences
    3.  Understanding Poverty
    4.  Inequality
                           Chapter 18                       2
     Learning goals
      After today’s lecture, you will be able to:
         – Explain the difference between “economic growth” and 
            “economic development.”
         – Understand the relevance to economics—and to economic 
            growth in particular—of the Industrial Revolution.
         – Describe general patterns of economic growth over time and 
            across different regions and countries.
         – Discuss the controversy concerning whether global 
            inequality is increasing or decreasing.
         – List various factors that play a role in development.
         – Explain how poverty, economic growth, and human 
            development are related.
                                  Chapter 18                              3
  Development and Economic 
  Growth
     Standard economic growth theory
     how is economic growth related to economic 
     development?
                     GDP
      GDPpercapita=
                  population
      for people’s incomes on average to increase over time,  
      GDP growth rate > rate of population growth 
      growthrateofGDP≈growthrateofpopulation+growthrateofGDPpercapita
                                Chapter 18                           5
      Figure 18.1 Economic growth in the AS/AD Model
                                    AS0      AS1                 Economic growth 
        )                                                          increases the maximum 
        π                                                          productive capacity of the 
        (                                                          economy. It involves both 
         
        e
        t                                                          supply-side and demand-
        a
        r                                                          side expansions, and does 
         
        n                                                          not necessarily involve a 
        o
        t                                                          change in the rate of 
        a
        f                                                          inflation.
        n
        I
                                                        AD1
                                                     AD0
                                        Expanded    Output (Y )
                                        maximum 
                                        capacity
                                         Chapter 18                                       6